U.S. Senate candidate Alexi Giannoulias' family bank has been closed by the FDIC . The move has been anticipated so it is no great surprise.

But the candidate has plenty of explaining to do. While Vice President in charge of loans, Giannoulias lent cash to known members of organized crime, as well as being banker to Obama's convicted real estate swindler/buddy Tony Rezko.

In fact, this Politico story from yesterday speculates on the possibility that Giannoulias will have to withdraw from the race thanks to these questions and others from his time at the bank:

It's an open secret, Democrats say, that White House officials are closely watching to see if Broadway Bank collapses - and if Giannoulias remains in the race if that happens.

In the event, he does step aside, state Democrats would convene to pick a replacement, with some still holding out hope of wooing a reticent Madigan.

A Giannoulias spokeswoman said there's no chance he would exit the race, adding: "Alexi keeps defying the odds. ... Despite a blistering primary campaign against an opponent who spent $2 million against him and an unparalleled attack from Republicans, he's raised $1.2 million and kept this race within the margin of error. This is a campaign that will be close to the very end."

But even Durbin acknowledges that the issues surrounding the bank create problems Giannoulias is going to have to address.

"It is controversial, [Giannoulias] would even admit that," Durbin said. "The question is whether or not he can resolve this by answering these questions directly and get his campaign on path. I will tell you this: The people of our state want a senator who is going to work to put this economy back on track; they do not want to go back to the Bush economic policies, which Congressman Kirk has supported."

Showing some good political sense, the Obama White House is refusing Durbin's entreaties for Obama to intervene and pull the candidate back from the brink. Although still very popular in Illinois, even the favorite son has seen his numbers tumble in the last year. Giannoulias is going to be poison, and despite his denials, he may be forced off the ticket by pressure from above.

If that were to happen, we would have the spectacle of both the Dem senate candidate and candidate for Lt. Governor (a pawnbroker) who won their primaries in February kicked under the bus by IL Democrats for being toxic.

Madigan is popular but what can she do to repair the damage to the Democratic brand as impeached governor Rod Blagojevich goes on trial later this summer?

Stay tuned.